Statistics from the Ministry of Housing and Urban-Rural Development show that the rate of urban owner-occupied dwelling rate hit 83 percent in 2007. The reason for this was the huge number of "mortgage slaves" obliged to keep up regular monthly repayments. Urban residents usually purchased an apartment with their savings, or by means of the housing accumulation fund, housing allowances or housing loans. Sky-high housing prices placed immense pressure on everyday citizens. Many young home buyers were forced to seek help from their parents to supplement their savings. In 2007, the balance of personal loans in Chinese financial institutions was RMB 3.2 trillion, 80 percent of which comprised personal housing loans. Housing prices in Beijing shot up again in 2008, to the extent that the average annual salary was insufficient to buy less than two sq meters.

    Hardest-hit are young wage-earners and people whose homes have been demolished for urban development. As they cannot afford to buy homes in a convenient location they have to consider cheaper housing on the city outskirts. Residential housing built since 2000 in Beijing is mainly located in suburban districts, having expanded from the Third Ring Road of 20 years ago to the Fifth Ring Road and even further out.

    Living in the outskirts, however, is not comparable to the situation in developed countries, whereby the well-to-do often live in suburbs and the poor reside in the inner city. The situation is actually the reverse in China. Suburban residential areas where young wage-earners live are known as "sleeping blocks." The people who make up this residential group spend most of their time either at work or commuting. By the time they get home they are too tired to do anything but sleep. Economist Wang Xiaoguang from the Academy of Macroeconomic Research under the National Development and Reform Commission predicts that low-income people who live in suburban areas will suffer even more from ever-heavier commuter traffic.

Beijing's housing prices shot up in 2008.

    Housing remains a crucial issue for low- to middle-income families and for the country in general. In 1994, the government began to build affordable housing to ease the problems of this demographic group. Cheaper than the market price, it is in huge demand, which is why eligible purchasers are selected by lucky draw.

    In 2005, home-seekers waited in line outside housing sales offices, night and day one month in advance, in the hope of obtaining a sequence number for affordable housing in Beijing's suburbs. The presence among them of high-income earners raised loud protests and the issue of justice. Professor Yan Jinming from the School of Public Administration of Renmin University of China stated: "Affordable housing is for the benefit of the low- and middle-income group, but problems still exist. This scheme also puts a curb on escalating house prices." Yan believes that there will soon be greater justice, transparency and efficiency in the system. Regulations regarding affordable housing, redefining qualified purchasers, standard layout and other details were instituted in 2007. Information on eligible applicants is also published in the media to ensure a just procedure.

    More than 90 million sq meters of affordable housing was under construction in 2008, more than 60 million sq meters of which has been finished. The government also revealed plans to build four million apartments in the coming three years.

    Since then the government has stipulated that annual land supply for low- and medium-priced housing and small- and medium-sized commercial housing (including affordable housing) and low-rent housing should be no less than 70 percent of the total residential land supply. By the end of 2006, 77.9 percent of cities in China had established low-rent housing systems and RMB 7.08 billion had been allocated to building low-rent housing. This move helped improve the living conditions of 547,000 low-income families.

    More policies and regulations guaranteeing affordable housing for the low-income urban demographic group are in the process of establishment. The Measures for the Guarantee of Low-rent Homes, for example, stipulate that no less than 10 percent of revenues from the land grant fee be allocated to construction of low-rent housing. Guo Songhai, director of the Institute of Real Estate Economy, Shandong Economic University, has pointed out that the government is changing from the "market first, guarantee second" to "equal stress on both market and guarantee" principle first formulated in the housing reform of 1998.

    A total of RMB 35.4 billion was invested in low-rent housing system in 2008 – 3.7 times that in 2007. This amount includes RMB 28.6 billion on housing construction and RMB 6.8 billion on subsidies. A total of 630,000 families have been provided with low-rent housing and 2.49 million low-income families have obtained government subsidies. The present system has basically solved the housing problems of families in financial difficulty.